Bank for International Settlements: Risk of Depression
June 26th, 2007Via: The Age:
THE risk of a 1930s-style economic slump has been heightened by “euphoric” markets tapping cheap global credit, one of the world’s pre-eminent financial institutions has said.
In its annual report, the Bank for International Settlements noted that the conditions that led to the Great Depression of the 1930s and the Asian crises in the 1990s reflected the current environment.
“Each downturn was preceded by a period of non-inflationary growth exuberant enough to lead many commentators to suggest that a ‘new era’ had arrived,” the bank said.
The BIS, the ultimate bank of central bankers, pointed to a confluence of worrying signs, citing mass issuance of new-fangled credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system.
“Behind each set of concerns lurks the common factor of highly accommodating financial conditions. ‘Tail’ events affecting the global economy might at some point have much higher costs than is commonly supposed,” it said.
The BIS said China may have repeated the disastrous errors made by Japan in the 1980s when Tokyo let rip with excess liquidity.
“The Chinese economy seems to be demonstrating very similar, disquieting symptoms,” it said, citing ballooning credit, an asset boom and “massive investments” in heavy industry.
About 40 per cent of China’s state-owned enterprises are loss- making, exposing banks to likely stress in a downturn.
It said China’s growth was “unstable, unbalanced, uncoordinated and unsustainable” borrowing a line from Chinese Premier Wen Jiabao.
In a thinly-veiled rebuke to the US Federal Reserve, the BIS said central banks were starting to doubt the wisdom of letting asset bubbles build up on the assumption that they could safely be “cleaned up” afterwards, which was more or less the strategy pursued by former Fed chief Alan Greenspan after the dotcom bust.
Research Credit: PD
” has been heightened by “euphoric†markets tapping cheap global credit, ..”
Would these markets be tapping into a Certainty Element in Funding Derivatives to both Feed and Service global credit …. at no Cost for IT is a Closed Loop, is it not.
No wonder the Banks are peeved, for they have dropped the Ball and have lost Control of the Game.
When the roof finally caves in on our economy, we can count on the Federal Reserve to bail us out by printing even more trillion$ worth of cash, with the Fed chairman himself tossing it out of a helicopter, right? Isn’t that what the monetarists have assured us, that the last Great Depression was caused by the Fed’s unwillingness to flood the economy with dollars after the stock market crash, and that they won’t make the same mistake this time.
“Helicopter Ben” will save us with giant mounds of worthless paper script.
The US ‘Bonar’ is now fast on it’s way to becoming what the Continental was.
colonial script worked fine until the british and their press agents in the new colonies caused its demise – in order to force us to use the crown’s currency and eliminate the new found prosperity – the use of fed script works because the crown has an advantage in forcing us to use it – when it is to their advantage to destroy the fed script – it will be destroyed – both times we are not in control of the press nor our own currency – sorry fallout11, read up and educate yourself – you are using script right now and it works – save for the usury attached to the dollar that is the cause of monetary and tax inflation we are experiencing. Give me a clam,cacao beans or beads or paper – in our country anything will work and work well as long as we control it – helicopter ben is right – in the 1930s they said “there is a shortage of money” but all they did was turne off the money prining machines – the whole thing was a farce – because we do not own our own country – perhaps its time again for the second great experiment and reinstate the unanimous declaration of independence and reinstate the original 13th amendment to keep foreigners allied to the very foreign fed out of our country